Monetary crisis overshadows Turkish election campaign

The Turkish lira has lost 16 percent of its value in just one month, significantly raising the cost of living for broad swathes of the population. An unpleasant situation for President Erdoğan just under four weeks before elections. The president has now called on Turks to convert their dollars and euros into lira to "protect their own currency". Can this put a stop to the slump?

Helpless appeals from the president

Erdoğan's appeal won't have any effect, the Süddeutsche Zeitung comments with conviction:

“Recep Tayyip Erdoğan rules his country with a heavy hand but there is one area where his power reaches its limits: the financial market. ... Helpless appeals are likely to have almost no effect because when in doubt even Erdoğan supporters will prefer to secure their assets. And international investors will be even less impressionable. So Erdoğan will no doubt rail even louder against foreign speculators in the run-up to the elections and blame them for the lira's nosedive. As a populist, one thing he really knows how to do is find scapegoats.”

Investors don't trust Erdoğan's regime

The president won't stop the lira's decline with his appeals, writes Evenimentul Zilei:

“The main problem is that foreign investment has fallen due to multiple actions by the Turkish administration. Because it has eliminated an important part of the media companies as well as many other businesses from the market on the pretext that they work with the Gülen movement. Moreover it has numerous lawyers, military functionaries and Western and Turkish citizens in its cross-hairs for diverse offences. ... The result is that investors are no longer confident about their businesses' prospects, how sustainable their investments are and what impact the divergences between their own country and the Erdoğan regime will have.”

West once again the scapegoat

Turkey is only too happy to blame foreign powers for its woes although such rhetoric is only worsening the crisis, Hürriyet Daily News explains:

“Occidentalism, which is to accuse West for all ills, and conspiracy theories have always been popular in non-Western countries. It also reflects the mindset of the ruling party in Turkey. As Turkey’s economy has long been suffering from structural weaknesses and mismanagement, the ruling party worsened the economy firstly by alienating Turkey from its Western allies and thus creating a problem of trust, and secondly, because the president’s two most prominent economy advisers are anachronistic believers of economic and political independence in this age of international economic interdependence.”

Foreign powers want to take over Turkey

The Turkish government blames "foreign powers" for the drop in the price of the lira. Columnist Yiğit Bulut of the pro-government daily Star also has no doubts about who was behind the currency's free-fall:

“Dear friends, it's clear that shortly before the elections Turkey's economic dynamism has been attacked in particular by certain foreign banks and institutions. They have always done this, and they are doing it again! What they're doing today with computers they did before on July 15, 2016, when they sought to take over our country with their henchmen and collaborators. But we're not afraid of them. We won't stop, but will stick fearlessly to our course!”

AKP destroying the economy

The AKP's economic and monetary policy is responsible for the slump in the price of the lira, economist Erinç Yeldan criticises in Cumhuriyet:

“Basically the inflation rate reflects the rigidity and disequilibrium of the labour market. The right way to fight inflation is to eliminate structural problems in the national economy rather than having the central bank slash interest rates on a daily basis (which is a short-term policy). At the risk of repeating myself, I must stress once again that the AKP's economic management, with its unscientific monetary policy and a growth strategy that depends on foreign markets and concrete buildings, is destroying our economy.”

Threatening investors won't help

President Erdoğan won't be able to boost the value of the lira with emergency measures, the Financial Times predicts:

“The weakness of the currency provided a loud warning that Mr Erdoğan's unorthodox views and erratic policies have been losing Turkey the confidence of financial markets. Financial markets are not like the hapless journalists he has put in prison. Like it or not, he depends on their good opinion. Only realistic and sober policymaking will ensure he is able to regain it.”